Technology Call Trades Jump in Bet on Rally Next Week

Bullish bets on technology stocks surged to almost quadruple the four-week average after a single transaction by an investor betting on a rally to a three-year high next week.

Almost all of today’s volume for the Technology Select Sector SPDR exchange-traded fund was concentrated in a single purchase of 100,000 January $26 calls, according to a report from Trade Alert LLC. The ETF tracking 86 companies gained 0.9 percent to $25.96 as of 4 p.m. in New York, the highest close since January 2008. Total volume for calls to buy the stock was 119,204, or 14 times the number of puts to sell.

“There’s definitely a bid in place in technology,” said Rick Fier, a trader at Conifer Securities LLC in New York. “It’s the one sure American sector that America still benefits tremendously from. We’re really a technology-based country, and this is what we export.”

Some of the largest U.S. technology companies, including Apple Inc., Intel Corp. and International Business Machines Corp., are scheduled to report earnings before this month’s options expire Jan. 20. Technology companies in the Standard & Poor’s 500 Index will boost fourth-quarter profit by 14 percent from a year earlier, according to the average of analysts’ estimates compiled by Bloomberg.

The block of calls traded at 21 cents. A buyer at that price starts to profit if the ETF rises at least 1 percent to exceed $26.21, the strike level plus the price of the option, before this month’s options expire at the end of next week. The shares haven’t closed above that price since December 2007.

To contact the reporters on this story: Jeff Kearns in New York at jkearns3@bloomberg.net; Cecile Vannucci in New York at cvannucci1@bloomberg.net.

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.

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